The future of Orange County's hotel tax is being decided. Got questions? Here are some answers

As visitors flock to Orlando in historic numbers, the region's two most powerful mayors are at odds over how to use Orange County's soaring hotel-tax collections.

The crux of the debate is that Orlando Mayor Buddy Dyer and Orange Mayor Teresa Jacobs don't agree on how much money is available for the spending proposals recently put forward by tourism industry leaders.

Jacobs argues too many tax dollars are already tied up paying off debt. Dyer says tourist dollars are coming in so quickly that local governments can take on even more debt, and pay it off, to finish prized projects such as the Dr. Phillips Center for the Performing Arts. Here's a breakdown of some key issues.

What's on the table?

The Central Florida Hotel and Lodging Association proposed allocating several large amounts of bed-tax dollars: $172 million for the convention center, $45 million for the arts center, $20 million for the Orlando Citrus Bowl and another $20 million for other cultural organizations. It also asked to boost Visit Orlando's annual budget by about 40 percent, and set aside $2 million to $5 million per year for bidding on sports events, and $1 million annually to improve the Amway Center, Citrus Bowl and Dr. Phillips center.

The tourist development tax is a 6 percent levy on short-term bed rentals, mostly hotel rooms. Collections were up about 12 percent in 2015 to $226 million. But that money isn't free and clear.

Each of the six pennies paid on every dollar in hotel taxes has spending restrictions, due to both state law and commitments to prior projects. For example, in Orange, the sixth penny is split between Amway Center debt and Visit Orlando, the region's tourism-promotion agency.

The other pennies are divided between Orange County and Orlando. The county gets the bulk, a base amount that increases by 2 percent yearly. In 2015, that was $150 million. Most of that goes to the Convention Center and Visit Orlando. Anything extra — last year, it was $38 million — goes to the city to pay debt for the arts center and Citrus Bowl.

Right now, Orange County is locked in a fight over a massive amount of money – somewhere around $3 billion over the next decade.

This has Mayor Teresa Jacobs warring with Buddy Dyer, hotel bosses warring with other hotel bosses and arts groups at odds with other arts groups.

It’s a complicated...

Right now, Orange County is locked in a fight over a massive amount of money – somewhere around $3 billion over the next decade.

This has Mayor Teresa Jacobs warring with Buddy Dyer, hotel bosses warring with other hotel bosses and arts groups at odds with other arts groups.

It’s a complicated...

(Scott Maxwell)

Is there anything left over?

Yes. But anything the city doesn't use for debt payments is kept with a trustee. The city can't use that money — not for new projects, and not even to further pay down the debt, said Orlando Chief Financial Officer Rebecca Sutton. By the end of the 2015 fiscal year, $40 million sat in the trustee's account.

Orlando believes it can pay for at least part of the CFHLA plan by taking on new debt. The city would issue $85 million in bonds, enough to upgrade the Citrus Bowl, finish the arts center and give a $4 million to $10 million boost each to the Orlando Ballet, the Philharmonic and the Science Center.

The city projects that hotel-tax collections will keep growing in coming years, enough to pay off its existing obligations and the new bonds by May 2024.

That's a key milestone. When Orlando pays off its bonds, all that excess hotel-tax money will no longer be locked away with a trustee. Instead, those millions will be available for Orange County to use on other projects.

What about the rest of the proposal?

The CFHLA also proposed new spending on Visit Orlando and the convention center. But Orange officials say the money simply isn't there right now. Since 2014, the county has dipped into reserves to cover convention-center renovations, spending nearly $30 million more hotel tax than it has taken in.

It's unclear how the CFHLA arrived at $172 million for the convention center. CFHLA President Richard Maladecki did not respond to interview requests over two weeks.

And both Jacobs and the International Drive Resort Area Chamber of Commerce have said that's not enough for the convention center. The county is already working on an expansion plan for the venue and, while the cost hasn't been revealed, the chamber says more than $400 million in improvements are needed.

Is the hotel tax reliable?

There have been two major downturns in the past 15 years: After the Sept. 11, 2001, terrorist attacks and the 2008 economic recession. Both times, collections dropped 15 percent, but recovered within two years.

Orlando officials say they have reserves, in addition to the money a trustee is holding, to cover several years of debt payments if needed. If another tragedy happened, the city might need a few extra years to pay its bonds off, but it would not risk default, they say.

But the longer Orlando takes to pay its bonds, the longer the county has to wait for the excess hotel tax money. Those dollars could help fund to the convention center expansion.

What's next?

The Tourist Development Council is expected to hold a workshop May 13 to discuss the CFHLA proposal, as well as the possibility of using hotel-tax dollars to lure the NFL Pro Bowl to the Citrus Bowl.

But Jacobs has said she would be uncomfortable voting on the CFHLA plan until November, when Orange voters could decide a charter amendment that would create an application process for hotel-tax spending proposals. Dyer argues the council should act sooner.

Due in part to its complexity, making the CFLHA plan a reality would require multiple votes of the TDC, the Orange County Commission and the Orlando City Council.